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Late afternoon post. US markets have continued to sink (SPY -2%) as we approach the closing bell. Crude prices falling sharply while the US dollar trades in the mid 95 handle. Gold has sunk to1333 and appears to be weakening further. Although short-term indicators are very bearish, BTFDers are about to jump in.

What Is Moving the Markets

NEW YORK (Reuters) - U.S. stocks dropped on Friday as investors were rattled by a nuclear test by North Korea and comments by Federal Reserve officials that hinted at a U.S. interest rate hike, putting the S&P 500 on pace for its worst day in over two months.

WASHINGTON (Reuters) - General Motors Co said on Friday it will recall nearly 4.3 million vehicles worldwide due to a software defect that can prevent air bags from deploying during a crash, a flaw already linked to one death and three injuries.

WASHINGTON/QUINCY, Mass. (Reuters) - U.S. Federal Reserve policymakers on Friday headed towards their policy meeting later this month divided on whether a rate rise is in the offing, with some of the permanent voting members appearing wary of supporting an immediate hike.

SEOUL (Reuters) - Korean Air Lines , the biggest shareholder in Hanjin Shipping , on Friday delayed a decision on a funding plan for the troubled company for a second time, adding to uncertainty about cargo stranded at sea following the failure of the world's seventh-largest container carrier.

DETROIT/WASHINGTON (Reuters) - A Volkswagen AG engineer pleaded guilty on Friday to helping the German automaker evade U.S. emission standards, and his lawyer said he would cooperate with federal authorities in their criminal probe.

FRANKFURT/MUNICH (Reuters) - BMW's management board is skipping the Paris Motor Show to hold talks aimed at breaking a deadlock over whether to produce new electric cars, including a battery-powered Mini, sources familiar with the matter told Reuters.

LONDON (Reuters) - Some 46 million people in Britain could potentially benefit from a legal case brought against Mastercard demanding 14 billion pounds ($19 billion) in damages for allegedly charging excessive fees, according to court documents filed in London.

While Put-Call ratios, VIX curves, and Fear-Greed Indicators are better known, the so-called "Complacency" Index - comparing real profitability of companies to their risk - has never been more complacent. In fact, markets are more 'exuberant' than at the peak in 2000 and 2007...

As Bloomberg's Christopher Langner notes, the whole world is moving together and signs of a massive bubble that spans asset classes are becoming clearer.

Historically, very high correlations are associated either with a panic or a bubble.

Extreme asset inflation tends to reach fever pitch partly because of what scholars call positive feedback, or where exuberance and herd mentality feed further investment.Some of the biggest bubbles of the past century were marked by this spillover to all asset classes.

But once one market pops, the rest deflate as well.

There are clear marks of a bubble in the current market.

Perhaps the best indicator is the so-called complacency index, which relates enterprise value (dictated by market prices for a company's debt and stock), Ebit (a measure of actual profitability) and the Chicago Board Options Exchange's Volatility Index, or VIX.

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